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Apartment Investment (AIV) Down 2.9% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Apartment Investment and Management Company (AIV - Free Report) . Shares have lost about 2.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Aimco Q1 FFO in Line with Estimates, Revenues Beat

Aimco reported first-quarter 2017 pro forma FFO of $0.58 per share, in line with the Zacks Consensus Estimate. The figure also came 2% higher than the year-ago tally of $0.57.

Results display growth in same-store property net operating income (NOI) and increased contribution from development, redevelopment and acquisition communities. However, the positive was partly offset by the loss of income from apartment sales in 2016.

Total revenue of $246.5 million exceeded the Zacks Consensus Estimate of $244.7 million. The reported figure also came higher than the prior-year quarter tally of $246.2 million.

Quarter in Detail

Same-store revenues increased 3.4% year over year to $161.2 million, while expenses rose 2.7% year over year to $48.4 million. Consequently, same-store net operating income (NOI) climbed 3.7% to $112.8 million on a year-over-year basis.

However, same-store average daily occupancy contracted 30 basis points (bps) year over year to 95.8%. Rental rates on new leases were down 1%, but on renewals were up 5.1% from the expiring lease rates.

As of Mar 31, 2017, Aimco held cash and restricted cash on hand of $88 million. Moreover, the estimated fair market value of the company’s unencumbered apartment communities came in at $1.6 billion.

Further, at the end of the quarter, Aimco’s outstanding borrowings on its revolving credit facility were $70 million and available capacity was $519 million, after considering $11 million of letters of credit backed by the facility.

Portfolio Activity

During the quarter, Aimco invested $41 million in redevelopment and development.

Moreover, as intended, Aimco continues to sell up to 10% of its lowest-rated portfolio each year, and uses the proceeds for acquisition and redevelopment of higher-quality apartments.

Through these measures, the company increased its revenue per apartment home by 7% to $1,996. The company has enhanced the quality and expected growth rate of its portfolio. Specifically, the percentage of A, B and C+ home was 51%, 35% and 14% in first-quarter 2017 compared with 48%, 35% and 17% , respectively in the year-ago quarter.     

Guidance

For second-quarter 2017, Aimco provided pro forma FFO per share guidance in the band of $0.56–$0.60.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

Apartment Investment and Management Company Price and Consensus

 

VGM Scores

At this time, the stock has a subpar Growth Score of 'D', however its Momentum is lagging a lor with a 'F'. Following the exact same course, the stock was allocated also a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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